Treasuries fall on economic data; US stocks finish modestly higher

(Bond Market Wrapup for October 25th, 2012) – Treasuries declined Thursday with 10-year yields touching their highest level since September 17, over increased speculation of more Japanese stimulus tomorrow. Improved economic data from the US tempered demand for safer assets after a Commerce Department report on durable goods showed a 9.9 spike in demand in September. A separate Labor Department report showed first time jobless claims dropped 23,000 to 369,000 in the week ended Oct 20. A third report showed pending-home sales rising 0.3 percent in September after a sharp decline in the prior month.

Economic development overseas also supported risk sentiments after preliminary reports from the UK showed GDP grew 1 percent in the third quarter, the fastest rate in five years. China’s Ministry of Industry and Information Technology said factory output should increase at a faster pace in the final quarter of 2012.

The Dow Jones Industrial Average (DJIA) climbed 26.34 points, or 0.2 percent, to 13,103.68, its first gain in three days. Breadth within the 30-stock blue-chip index turned positive with winners outpacing laggards 19 to 11. Proctor & Gamble Co (PG) was the biggest gainer in the Dow, rallying 2.9 percent, after the consumer goods major announced mixed results but maintained its outlook for the full year.

The S&P 500 Index (SPX) added 4.22 points, or 0.3 percent, to 1412.97 with energy and healthcare gaining the most and telecommunications and technology hitting the ground hardest among its 10 business groups.